Employer Compensation
ICESR
2 August 2013
Lieutenant Colonel Steve Caldwell
Reserve Forces and Cadets
GBR Ministry of Defence
Main Themes
Not debate payment to reservists
 Employer should not be disadvantaged
 Defence must get value for money
 Compensation for employer ranges from
• Nothing
• Compensation on production of receipts
• Flat rate payment, irrespective of actual costs
 Less employers claim than expected
UK Reserve Forces
Main Issues/Difficulties
 Overcoming ignorance of employers
 Reducing bureaucracy
• Capturing expended costs
• Keep it simple - implementing tax relief complicated
 Looking ahead:
• The move from pre-planned to contingent mobilisation
• Uncertain or early demobilisation date
UK Reserve Forces
Main Challenges
 Discussion to be continued within the Workshop
• Affordability
• Fairness to employer
• Return to less certain mobilisation profile
 Presentations to facilitate debate
• Australia
• Netherland
• Poland
• United Kingdom
+ input from Canada
UK Reserve Forces
GBR Perspective
Financial assistance for Employer only activated
when reservist mobilised for operations
6000
Number of Mobilisations
5000
4000
3000
2000
1000
0
2003/4
2004/5
2005/6
2006/7
2007/8
2008/9
2009/10 2010/11 2011/12 2012/13
UK Reserve Forces
No Compensation for NonMobilised Service
Man Training Days – all Volunteer Reservists
•
•
•
•
Pro rata pay for 19 – 90 days per year.
Tax-free Annual Training Bounty - Max £1674 (after 5 years).
Paid annual leave.
No pension, medical, or housing assistance.
Additional Duties Commitment (c500 reservists)
•
•
•
Maximum 180 days per year.
Pro rata pay and benefits, includes pension and leave.
No medical or housing allowance.
Full Time Reserve Service (c2,000 reservist)
•
•
– 3 forms:
Work as a regular (active duty) service person
Not mobilised.
UK Reserve Forces
FR20 Better Balance Financial
Proposition
 Easier to make financial claims
 FR20 proposes extra £500 per month per mobilised
reservist for employers with less than 250 employees
UK Reserve Forces
Current Financial Assistance
 Supported by legislation
• The Reserve Forces (Call-out and Recall) (Financial
Assistance) Regulations 2005
 Money available for reservist - Reservist Award
 Money available for employer – Employer Award and
Training Award
UK Reserve Forces
Employer’s Award
An employer’s award shall, subject to a cap of £110
per day, be the amount by which the replacement
costs incurred by the employer exceed the relevant
earnings of the reservist.
Replacement Costs
Daily rate of:
(a) pay to any replacement of the reservist
(b) any –
(1) overtime payments to existing employees
(2) increases in salary of existing employees
where an adjudication officer is satisfied that they
are attributable to the absence of the reservist
UK Reserve Forces
Example
 Reservist normally paid £100 per day
 Additional overtime for 4 men is £20 each per day.
 Therefore replacement cost = £80 per day.
 It is less than cost of reservist, so no employer award
 If total overtime cost = £150 per day
 Then employer award is £50 per day
 If replacement worker hired costs £180 per day
 Then employer award is £80 per day.
 If replacement worker hired costs £250 per day
 Then employer award is capped at £110 per day.
UK Reserve Forces
In addition…
 Employer can claim for certain non-recurring
costs incurred in replacing the reservist. These
are:
• Agency fees
• Advertising costs
 Training Award
• Where training required on return from mobilisation
• Complete within 6 or exceptionally 12 months of return
UK Reserve Forces
Payment
 Employer award paid monthly in arrears end of
each month
 Calculated as the daily rate multiplied by the
number of days that month that the reservist is
absent by virtue of mobilised service
 Training award must be claimed within 8 weeks of
returned reservist completing the training
UK Reserve Forces
Employer Claims
 No clear link between numbers mobilised and
number of claims from employers.
• If the replacement employee is on same or lower wage
then no replacement award can be claimed.
• Employers can use the current labour market situation to
their advantage.
 Historical numbers of claimants are low.
• In last ten years annual numbers of employers submitting
a claim range is 30-60 employers claimed from 20002500 mobilised reservists. Equals 2.4%.
• In FY 11-12 there were 117 payments made to 67
employers.
UK Reserve Forces
 Difficult to put a figure on an ‘average’ claim as
claims can vary depending on whether they are for
replacement costs or for agency fees and
advertising.
 Amount paid to employers reduced for the last 3
years.
• FY 10-11 = £421,000
• FY 11-12 = £376,000
• FY 12-13 = £279, 000
= £70 per mobilisation
 Evidence suggests that claims are made by smaller
employers (SMEs) who feel the loss and associated
administrative burden greatest.
UK Reserve Forces
Areas to Address
 Less certainty when reservists will be mobilised
for contingent operations
 No additional payment for employees accepting
reservists being on High Readiness Reserve
 Earlier than expected demobilisation and
associated cost of releasing replacement workers
UK Reserve Forces